March 16, 2011
In light of recent events, we would like to update you on the Fundamental Equity Team’s exposure to Japan across our global platform as of March 16, 2011.
The Global, International and International Small Cap Equity portfolios all have relatively neutral direct exposure to Japan vis-à-vis their benchmarks, as we take the majority of our risk through bottom-up stock selection rather than through deviations at the country level. Our European Equity portfolios have no direct exposure to Japan. Indirect exposure to Japan in these portfolios is largely stock-specific and, in general, limited to the following sectors: Insurance, Energy, Utilities, Information Technology, Industrials, Materials, Health Care and Luxury Goods.
The US Value, US Growth, and US Equity portfolios have minimal exposure to Japan driven by the nature of our US orientation. We expect even less of an impact to our smaller cap US portfolios. Overall, we have not made any major changes or sector shifts as a result of the crisis in Japan, but we are monitoring certain individual securities carefully. The indirect exposure is stock specific and largely isolated to the following sectors:
In Asia, we believe the impact will be to property companies with assets in Japan, refineries and petrochemical sectors, and coal. We believe rebuilding in Japan is also likely to spur demand for building materials. We continue to closely monitor our portfolios’ positioning.
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